Why is Payment being received from a plugged well?

Small payments are being made by OXY for a P&A well located at S11 T24S R37 E. I think the well was originally referenced as the Hair lease with first production in 1936. The lease was evidently either re-drilled because it is now referenced on OXY’s records as Myers Langlie Matix TR 81. Wouldn’t the lease be terminated with the P&A of the well? I have considerable minerals in this section so I think it is worth having an understanding of what is going on. Is this common practice? I do not have the lease documents for the OXY lease but I am out of state so I can’t drop into the county register’s office. Can anyone point me to a source so that I know the current legal status of the lease? I have a lot of questions so I will appreciate any input or comment from others. Thanks – ADS

I have a very similar situation, so I am very interested in the responses here.

Are you sure your lease isn’t unitized? If it is, you are probably getting paid for other wells not on your lease. I actually worked on a Langlie-Mattix Unit way back in my Amoco days, although I have no idea whether your lease was part of it.

Can I void my old lease if it has been unitized? I would like to get out from under my old existing lease as others have expressed an interest in leasing it. (I was never informed about it being pooled with surrounding lands, if, in fact, it was.)

Unlikely. Your lease probably contains a unitization clause (most leases do) which allows the Operator to pool and unitize as they see fit. You really need a copy of your lease to be sure…

Look at your check stub carefully and make sure it is not a shut in royalty payment.

I have visited my old property records and found the 1974 unitizing documents for the subject well which i can now study. Interestingly, the run ticket accompanying my 2018 check was a multipage report showing production from 2013 through 2018. Actual production was listed from the “unit track”.

My unit agreement for Myers Langlie Matix (1974) references a specific formation between about 3000 and 3600 feet. So that means OXY will still share the proceeds from the Unit 81 even with the well has been “plugged and released” as referenced in the NM Well Info. One then must ask does this mean that that geologic structure is off limits for further development, but that anything below is fair game for leasing and development? I wonder if there is anything of value below 3600 ft!

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From what I’ve read, all the current drilling, particularly horizontal is below 8000 ft.

But that info is at least four to six years ago. It might be deeper.

The unit agreement might be limited to the shallower depths, but most old leases don’t have depth severances so the lease is likely maintained as to all depths so long as there is production anywhere on the unit. You could have an attorney look at it, but your acreage and depths is probably still tied up by the old lease. And, yes, in this area, the targeted Bone Spring and Wolfcamp formations are well below 3,600 feet.

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